Primary sector exports under threat from Australia-China FTA

New Zealand’s first
mover advantage from its China free trade agreement (FTA) is
at risk of being diluted as Australia’s newly-elected
Government looks to conclude its own FTA with China,
according to global accounting body CPA Australia.

CPA
Australia country manager for New Zealand, David Jenkins,
says after eight years of inconclusive negotiations the new
Australian Government will likely seek to finalise a free
trade agreement with China within 12 months.

“While
recent food safety scares have been a big wake-up call for
New Zealand exporters, now is definitely not the time to be
complacent or fall back on the fact we were first with a
China FTA.

“There are many barriers that Australia and
China still need to overcome before a free trade agreement
can be concluded, particularly in the financial services
space, but these barriers are not insurmountable.”

“An Australia-China FTA would mean more
competition for Kiwi exporters, particularly in the primary
sector. Currently, it is reported that New Zealand
exporters of products such as lamb, beef and wine enjoy a 10
to 15 per cent price advantage over our Australian
competitors, and this price advantage is attributed
primarily to the New Zealand-China FTA.”

Mr Jenkins says
New Zealand businesses cannot assume that this price
advantage will continue – and they should be using the
period leading up to the commencement of a probable
Australia-China FTA to build on their competitive
advantages, including deepening existing relationships,
building new relationships and new product development.

“The assumption that New Zealand exporters must work
under is that an FTA between Australia and China will be
signed soon, and they must prepare for greater
competition. Those that act now to improve competitiveness
and productivity are more likely to succeed in the emerging
environment. Those that are complacent are more likely to
fail, regardless of their
size.”

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